Auditor’s work may extend to EWEB

Christian Hill @RGchill

Thursday

Dec 14, 2017 at 12:01 AM

The proposed Eugene city auditor’s office would have sweeping authority to examine not only the operations and spending of the city’s municipal government, but also the Eugene Water & Electric Board, the Lane Transit District and even private garbage haulers, according to a lead advocate of the measure.

That apparent expansive scope came to light over the weekend when a disagreement emerged between the city’s lawyers and City Accountability, the group that qualified the measure for the May ballot, over whether the auditor would have the authority to examine the operations of EWEB.

City lawyers claimed that the auditor would not have that power. City Accountability said the auditor would.

Bonny Bettman McCornack, a former city councilor and a leader of City Accountability, then asserted Wednesday that the auditor’s work could extend to examining other agencies, both public and private, with ties to the municipal government.

“Where there are Eugene taxpayer funds involved, the entity is auditable,” she said. “And, of course, we talked to lawyers and audit experts, and the language was all-encompassing,” McCornack said in describing the language City Accountability wrote into the measure.

Although City Accountability has spent months pushing the ballot measure, the question of which agencies the auditor might or might not have the power to investigate only now has emerged as a matter of public discord.

The measure would create the office of an independent elected auditor who would serve four-year terms.

The auditor would be able to audit “all city operations and activities, including but not limited to: departments, offices, boards, activities, agencies, contracts, franchises, projects and programs,” according to the measure. The auditor’s office would have the ability to dig deeply into the financial and other records of the entities it examined.

The auditor would seek to ensure the city is spending public money effectively and to root out any waste or fraud.

Some city councilors and residents have criticized the auditor proposal as lacking oversight because the auditor’s office would operate separately from the City Council and city manager. Measure backers, however, say the auditor’s work would be subject to a third-party peer review and, ultimately, the will of voters.

Last month, as they were mulling their formal response to the measure qualifying for the May ballot, Eugene city councilors asked whether the city auditor could audit EWEB’s operations. Eugene city councilors didn’t take a stance on the measure. In a memo Friday, Glenn Klein, an attorney for the city, concluded no.

Bettman McCornack fired back in an email to the City Council. In it, she copied the language in the Eugene city charter that authorizes EWEB to provide electricity and water to Eugene residents on the city’s behalf. An elected five-member board governs the local utility.

“EWEB is chartered by the city to provide a city service, and to the extent that there are Eugene taxpayers’ funds involved in EWEB, EWEB is auditable by the elected city auditor,” Bettman McCornack said Wednesday.

She said Klein’s conclusion to the contrary is a “glaring example of the ways in which the city will move to limit an auditor’s scope of work.”

EWEB spokesman Joe Harwood said Wednesday that lawyers for the utility, which retains legal counsel separate from the city attorney’s office, haven’t look into the issue.

“It’s premature at this point,” he said.

In his memo, Klein noted there was virtually no mention of EWEB in the text of the measure. He said the measure’s text frequently references the City Council and city manager in outlining the duties of the city auditor.

The only mention of EWEB in the entire text of the measure relates to the salary of the city auditor, Klein said.

The measure says the auditor’s base salary can be no less than 70 percent of the average of the salaries for three chief executives: the Eugene and Salem city managers and EWEB’s general manager.

“Since EWEB is mentioned specifically in this subsection, but not in the other sections mentioned above, a court is likely to conclude that this proposed charter amendment does not apply to EWEB or its operations,” Klein said.

Asked why City Accountability didn’t specifically identify in the measure the city auditor’s authority to audit EWEB’s operations, Bettman McCornack responded, “because it’s spelled out in the charter.”

Klein and Bettman McCornack also dispute whether EWEB’s budget should be included in the calculation for the auditor office’s budget.

The measure would set the office’s minimum budget at one-tenth of 1 percent of the city’s total adopted budget.

Klein said EWEB’s total budget would need to be included in that calculation, if a court ruled that EWEB falls under the purview of the city auditor.

“There is nothing in the initiative to suggest that the word ‘city’ should be construed differently (to include or not include EWEB) in different sections of the initiative,” he said.

The city’s total budget in the current fiscal year is $677 million. EWEB’s total budget is $307 million. Taken together, the city auditor’s minimum annual budget would be $984,000.

McCornack said EWEB’s budget couldn’t be used in calculating the auditor’s budget because the measure clearly would tie the auditor’s budget to the overall budget for the municipal government.

“We couldn’t include everything,” she said, adding that City Accountability used the small percentage of the city’s total budget as a baseline “because it’s an objective metric, it’s going to go up or down with the … economy.”

She also explained why garbage haulers and LTD would fall under the purview of the city auditor.

She said the city signs franchise agreements with local haulers to provide a municipal service — the collection of garbage and recycling.

Bettman McCornack also said the city delegated its authority to receive state and federal transit funding and grants to LTD, the area’s transit provider.

LTD spokesman Edward McGlone said he was unaware of whether LTD received that funding under such an arrangement.

He said LTD is a special taxing district as defined under state law that wouldn’t be subject to an audit unless LTD agreed to one.

It’s unlikely the emerging disagreement will be settled before the election. Klein said a court won’t issue an advisory opinion interpreting a measure that voters haven’t approved.

A court could settle the dispute if the auditor decided to sue EWEB over a refusal to cooperate on an audit request by the office because of a lack of authority.

“If the city or EWEB wanted to use taxpayer money to fight an audit, that’s not unprecedented in the auditing profession,” Bettman McCornack said.

The measure would give the auditor’s office the authority to hire its own lawyers to assist in fulfilling its duties.

Harwood said EWEB would cooperate with the city auditor if voters pass the measure and regardless of whether EWEB falls under the office’s purview.

“One way or another, if folks want to see what’s going on here, come on in. We’ll open the door,” he said. “It’s just not an issue for us.”

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